Business Can Do More: Leadership and Ownership in the 21st Century

Thomas Piketty and the German Federal Constitutional Court set it in motion: the debate about ownership, inequality, and inheritance. There are those who want to radically tax businesses and heirs, while others view this as calling into question the foundations of our economy, its momentum, and its innovative capability. We wish to offer a third perspective to expand the debate on ownership in the 21st century: How can ownership become “Responsible Ownership”?

The understanding of responsibility is first and foremost tied to our concept of humanity. Do we distrust our fellow human beings? Do we suspect employees of not providing peak performance? In that case, tight management is needed that defines important goals and uses elaborate bonus systems to motivate subordinates. Top management, on the other hand, needs the pressure of the stock market and principals to avoid falling into complacency. In this process, we disenfranchise one another. We are responsible for the doings of others, instead of our own actions. On a state level this is referred to as planned economy. This is precisely what can often be observed in corporations. The entrepreneurial spirit, the ability to be innovative, the sense of work and responsibility for one’s own achievements—they all suffocate under regulations, hierarchies and the pressure of shareholder value. Behavioral economists speak of “the suppression of intrinsic motivation” through “extrinsic incentives.”

Can we instead consider a liberal view of humankind, one that trusts in the power of freedom and self-responsibility? Some companies are attempting to do just that—with success. One example is Buurtzorg, a home-care provider founded in 2006 in the Netherlands. It has seized 85 percent of the market today and employs more than 10,000 people, but it has no boss. Buurtzorg allows employees to remain with patients for as long as they wish, instead of the usual industry practice of setting to the minute guidelines. Thousands of independently thinking employees are making better decisions than the brightest manager back at headquarters. KPMG and EY have ascertained that their costs are 40 percent below those of the purportedly highly efficient competition. The world’s largest tomato processor, Morning Star, works in a similar fashion, for example. Many more are heading down this path. Creative talents—for whom purpose, freedom to create, and self-management are essential—can be attracted and retained this way.

A plea for self-ownership

A liberal management philosophy will follow the question of “how” with “for what and for whom do we work?” The CEO of Voith, a German family-owned €4.3 billion technology company, for instance, answered this question in the Handelsblatt: Management works to increase the assets of the ownership family. For listed companies, this is called maximizing shareholder value. Because almost no one works out of intrinsic motivation for the wealth of prosperous third parties, hierarchy and a top-down culture are necessary. If one wants to foster individual responsibility and a sense of partnership, then one will need to reconsider both the management and the ownership culture.

For instance, this is being done by the 43,000 employees of the Globus chain of hypermarkets, or dm Drogeriemarkt or even Buurtzorg. Their proprietors do not view ownership as a private possession but rather as an ownership of responsibility. The company ultimately belongs to itself. An appropriate legal structure (with foundations) ensures that profits are available to the company as seeds for the future or are donated and therefore do not flow into private possession. Additionally, the owners have made another decision: Ownership and entrepreneurship are permanently interconnected. The voting rights always reside with those who are leading the company. Investors will never be in a position to control the company as a non-involved party. This way, long-term decisions can be made, which often remain inexplicable for investors but are important for innovation.

Ownership of responsibility carries over the principle of self-management to the property level: self-ownership. It makes it possible for a company to actually be there long term for its customers and its community. It creates a bond of trust with the employees.

In a time when capital is inexpensive, and the true key to success lies in people and ideas, it is worthwhile to radically question the traditional understanding of leadership and ownership.

The authors are co-founders of the “Purpose Platform,” which supports companies in this transformational process. Thomas Sattelberger is a former Board Member of Human Resources for Deutsche Telekom and Continental and a visionary for business transformation and the future of work. Armin Steuernagel is the founder and owner of businesses in the food retail and eCommerce sectors. He advises other entrepreneurs on ownership structuring and is a member of the young Think Tank of the Club of Rome, TT30 and the Neopolis Network.